Brown-Forman Corporation (BF.B), one of the world’s leading producers and distributors of premium alcoholic beverages, declared that its Board of Directors approved a $250.0 million share repurchase program, which reflects the robust long-term growth outlook of the company.
Under this program, the company will be authorized to repurchase up to $250.0 million of its Class ‘A’ and Class ‘B’ Common Stocks through the open market, block transactions and privately-negotiated transactions until November 30, 2011. The company has the option of modifying, suspending, terminating or extending the program without giving any prior notice.
Earlier, Brown-Forman reported third-quarter 2011 earnings of 96 cents per share, compared with 73 cents in the year-ago quarter. The growth in earnings was primarily driven by strong top-line growth and improved margins. Quarterly results outpaced the Zacks Consensus Estimate of 86 cents per share.
Brown-Forman has a record of enhancing its shareholders’ wealth through various means, and distributing profit is one of them. During the third-quarter, the company paid a cash dividend of 32 cents per share, thus maintaining its history of paying quarterly cash dividend to its shareholders for the last 65 years. The company also paid an additional special cash dividend of $1.00 per share to its Class ‘A’ and Class ‘B’ shareholders.
On January 27, 2011, Brown-Forman’s Board of Directors approved a regular quarterly cash dividend of 32 cents per share on Class ‘A’ and Class ‘B’ common stock, which will be paid on April 1, 2011 to stockholders of record as of March 9, 2011.
Separately, Brown-Forman agreed to sell its Hopland, California-based wine asset, Fetzer Vineyards, to Vina Concha y Toro S.A., a Chilean wine producer for $238.0 million.
The sale includes its bottling facility, Fetzer wine, Fetzer brand and other California-based wines, but excludes its super-premium Sonoma-Cutrer brand. Under the financial advisory of Rabo Securities USA Inc., management expects to close the deal by April 2011. The company, with this deal, intends to focus on markets offering better prospects and higher returns.
The company boasts a strong portfolio of 29 brands, including the flagship brand Jack Daniels, as well as Southern Comfort liqueur, Canadian Mist whiskey, Finlandia vodka, and Fetzer and Korbel wine brands.
Brown-Forman markets its products in more than 135 countries including, the U.S., the U.K., Australia, Mexico, Poland, Germany, France, Spain, Italy, South Africa, China, Japan, Canada, and the Russian Federation. The Louisville, Kentucky-based company also comprises 16 production and warehousing facilities spread across the U.S., Europe and Mexico.
Brown-Forman, which competes with Constellation Brands Inc. (STZ) and Diageo plc (DEO), currently holds a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock. Besides, the company retains a long-term ‘Outperform’ recommendation on the stock.
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